401K Plan Design and Benchmarking

Business Services Consulting

As Plan Advisors, we accept ERISA 3(38) Liability in writing. Does your current provider? As fiduciaries to your company’s retirement plan, we offer plan sponsors significant fiduciary protection. Our investment processes are designed to adhere to the fiduciary standards necessary in today’s markets.

Fiduciary Oversight

We seek to provide plan sponsors with a level of fiduciary safety by using investment committee meetings, plan governance documents, the monitoring and review of various service providers, and employee education.

For most small and medium sized businesses, the owners and executives share plan responsibilities. Oftentimes these individuals spend the least amount possible on retirement plan issues, despite their roles as fiduciaries. This is unfortunate because the obligations they assume as fiduciaries to the plan are significant. We hear from these individuals that regardless of their primary job functions, finance and human resources executives usually have a little time or the tools to fulfill these fiduciary obligations. It’s this lack of time and uncertainty about their obligations that creates the cause of concern towards assuming personal liability working as a plan fiduciary or sponsor.

To address this issue, we designed a fiduciary monitoring program that helps to protect them and establishes adherence to proper plan management.

In our program, our clients may satisfy the following plan sponsor functions with an unparalleled level of assurance:

1. Demonstrate committee decision making through a document trail.
2. Understand and evaluate the key factors required in investment management decision making.
3. Adherence to a properly designed plan document and the committee’s investment strategies through an Investment Policy Statement.
4. Avoiding conflicts of interest.
5. Monitoring of plan service providers according to the benchmarks for plan sponsors.

Fiduciary obligations are reviewed and addressed in each plan year by quarterly or semi-annual investment committee meetings. Each investment committee meeting is designed to review investment policy documents and evaluate the service providers to the plan.

Each decision is properly reviewed and documented through meeting summaries, newsletters, compliance documentation, employee education and much more. Plan sponsors maintain as evidence of deliberation their investment rationale and map key decision making processes within the plan’s guiding documents.

We help investment committees align internal responsibilities and the benchmarking processes with the services of operational platform providers such as administrators, record keepers, custodians, and investment managers.

Investment Selection and Monitoring Due Diligence Processes

The volatility in capital markets and its effects on investments available to plan participants is ever-present. For retirement plan sponsors and their fiduciaries, it is essential to develop and maintain an investment due diligence process that selects and monitors investment managers.

We work with retirement plan committees to develop and maintain a plan's investment strategy. This is codified into a specially designed Investment Policy Statement. The IPS is then used as a guide to evaluate and monitor your current investment offerings, measuring them against applicable indices and the broader universe of investment options. The objective is to create confidence amongst plan fiduciaries that your plan's investments are diversified, well managed, and meet the stated objectives of your IPS.

We provide this comprehensive analysis by utilizing industry best practices with members of our in-house research department. By blending qualitative and quantitative research we help ensure a process that is consistent and repetitive. This process ensures the plan committee that research is being conducted and reported regularly. The committee will receive detailed analyses along with executive summaries describing which managers continue to pass our screening process and which need to be "watch listed" for successive quarters.

Participant Education and Communication

To create a framework for participant education and communication, we develop an Education Policy Statement. This policy is a critical component to the long-term success of a participant’s retirement plans.

We review with the retirement plan committee the range of investment education topics that can be distributed to participants and then create the most appropriate program for their employee population.

Of vital importance to the long-term success of the plan is the consistent implementation of this participant education. We seek to increase employee knowledge of the specific plan benefits and hence increased participation.

EPS communication strategy includes:

• Pre-enrollment emails, posters and announcements
• All on-site meetings conducted by seasoned advisors
• On-site group enrollment meetings
• On-site individual enrollment meetings
• On-site group investment education meetings
• Video teleconferencing meetings for remote locations
• Access to on-line investment and financial planning tools
• Customer service representatives and e-mail contacts for plan participants

Plan Benchmarking

For most plan fiduciaries, there is no set plan benchmarking program. The process of gathering pricing information and benchmarking it to peer groups and indexes is confusing and time-consuming. In addition, fee reports and standard of service contracts can lack pertinent information and often bundle provider fees together making it difficult to understand the actual costs.

We help plan sponsors in breaking down the fee structures of the various administrative, recordkeeping, compliance, and employee communication service contracts.

Disassembling these fees helps plan sponsors understand actual plan costs and enables a review of fees that are excessive relative to peers. It is the plan sponsor’s obligation to ensure the fees paid by the plan and participants are reasonable relative to other providers. We act a partner to plan sponsors in analyzing all the embedded fees in their current plans and, on a going-forward basis, continuously review cost structures and contracts as plan assets grow.

Plan Design and Compliance

Since the introduction of individual retirement plans into the retail market, the various product and service providers have consistently developed and marketed new products. In addition to the competitive marketplace, there have been various changes in the legislative landscape that effect plan sponsors.

The reporting and regulatory obligations for plan sponsors continue to evolve and create burdensome administrative issues for company sponsored retirement plans. It is more important than ever for sponsoring firms to adopt processes to maintain compliance with the regulations and ensure their participants are accessing new products and services when appropriate. Recent legislation has focused on increasing plan participation and for many sponsors, changes to plan design can aid in achieving these goals.

Our Advisors consistently review the plan’s design from an objective and unbiased perspective.

Issues of concern may be:

• Increased employee deferral limits and employee tax credit incentives
• Increased employer plan contribution deduction limits
• The relationship between loan incidence and plan participation
• Tiered and Age-Weighted discretionary contribution formulas
• Online participant access for account balance inquiry and changes
• Key personnel Internet access to plan and participant data
• Paperless enrollment
• Electronic transmittal of payroll, loan and distribution transactions
• Automatic enrollment/negative election
• Controlled Group plan set-up and design alternatives
• Optimum frequency and educational content of employee communications
• Complying with 404(c) investment guidelines and requirements
• Management of the conversion/transition process

We specialize in working with small businesses, understanding your growth goals and implementing and supporting plans to help you achieve them. We work with companies throughout the country — around the world really — but the thrust of our small business efforts and the majority of our clients are within the Tennessee Valley.